Hey traders, Barry Burns here from Top Dog Trading! In this lesson, I’ll share my absolute favorite Japanese candlestick pattern — one that reveals powerful market rejection and helps you catch high-probability trades. We’ll break down exactly how to identify it, why it works, and how to use it with trend and momentum confirmation for consistent results.
Hope you enjoy it!
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My #1 Japanese Candlestick Pattern for High-Probability Trades – Video
Introduction
Hey traders, Barry Burns here from Top Dog Trading! In today’s lesson, I’ll show you my absolute favorite Japanese candlestick pattern — one that clearly shows market rejection and helps you identify high-probability trading opportunities.
The Importance of Rejection in Trading
What we’re looking for in price action is rejection of value. Rejection tells us where the market tried to go but couldn’t — a key insight into trader sentiment and institutional control.
This is similar to Market Profile concepts, where rejection at certain price levels indicates imbalance between buyers and sellers.
The Candlestick Pattern Setup
The pattern itself is simple:
- You’ll often see a long wick or shadow on one side, showing where price was pushed but then sharply rejected.
- The body is relatively small, showing indecision after a failed move.
- Context is critical — you want this to appear at a key support or resistance level, or after a strong directional move.
When you spot this kind of pattern, it’s the market telling you, “We tried to go higher (or lower), but there was no more fuel.”
Applying Context and Confirmation
Never trade the candlestick pattern in isolation. Use it alongside:
- Trend direction (e.g., via moving averages)
- Cycle timing (to gauge where you are in the wave)
- Momentum confirmation (to ensure there’s strength behind the reversal or continuation)
The candlestick gives the signal, but the context gives the confidence.
Example in Action
Let’s say we’re in a strong uptrend. Price pushes higher, prints a long upper wick, then closes weak. That’s a clear sign of buyer exhaustion — a possible short-term reversal setup.
Conversely, in a downtrend, a long lower shadow with a strong close back up suggests seller exhaustion and a potential buying opportunity.
Key Takeaways
- The candlestick pattern shows rejection of value — a powerful visual cue of who’s in control.
- Combine it with trend, momentum, and cycle analysis for higher accuracy.
- Always confirm with market context before entering a trade.
Bonus Resource
Want to learn more about timing your entries and spotting these patterns in real time?
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